A few years ago, I was a wayward freelancer in New York City (still…am) and not very on top of adult matters. One early April morning, I saw my roommate sitting with stacks of receipts on our coffee table and felt an immediate sense of dread. I realized I would never make it in time. I would never file my taxes before the deadline, and figuring out the extension process overwhelmed me.
Trust me, I don’t want the same fate for you, dear reader.
This has been a wild couple of years, and if you find yourself still catching up on life, we’ve got you. Below, we’ve partnered with TurboTax to give you some resources for navigating your taxes so you can file before, Tax Day – April 18.
Where do I start?
To begin with, take a deep breath. It’ll be OK! Here’s the most important part: . With TurboTax, it’s easy and fast to file, especially if you have a W-2 job . You just need to start by having your W-2s and any documents for deductible expenses (like student loan interest Form 1098-E) handy when you are ready to file.
But if we’ve caught you, say, April 18 or a few days before, you can still file up to the tax deadline at 11:59 PM in your time zone. . If we’ve caught you even earlier before March 31, TurboTax is offering its “$0 Any Way” deal where you can file your simple tax return for free with the help of a TurboTax Live tax expert – you can choose to either have an expert help you along the way with the TurboTax Live Basic Offer, or fully hand your taxes off to an expert with TurboTax Live Full Service Basic Offer for free. If you have a simple return and prefer to do your own taxes, you can file for free the entire tax season with TurboTax Free Edition. All of these services are designed for tax filers with a simple tax situation, filing Form 1040 only. Simple situations covered include W-2 income, limited interest and dividend income, standard deduction, Earned Income Tax Credit, Child Tax Credit, and Student Loan interest Ok, next up…
What if I need to file an extension?
You should only file an extension if you absolutely have to. If you have a simple tax return, have all your documents, and can file for free, there’s no need to wait! Especially since more than 75% of taxpayers received a tax refund last season and the average tax refund was more than $2,700.
If I owe money and file an extension will I get an extension to pay?
No, an extension only gives you more time to file until the extended October 17 deadline and does not give you an extension to pay. If you start filing now, it will give you time to figure out if you owe and how you will pay what you owe. Who knows, by the time you take advantage of deductions and credits like the standard deduction ($12,550 if you’re a single filer or $25,100 if you’re married filing jointly) and the Earned Income Tax Credit (up to $1,502 if you are single with no kids) you may be getting a tax refund.
What if I needed to file an extension but didn’t file for one?
The consequences (sorry to use this scary word) depend on whether you owe the IRS money or not. Once you miss that April 18 deadline without filing an extension, you will be charged a failure-to-file and a failure-to-pay penalty if you owe money. This sucks, we know. So filing by the April deadline will help you avoid penalties.
What if I’m getting a refund?
You can rest a little easier. If you have a refund coming from the IRS, there is no penalty for failing to file your tax return by the deadline — even if you forget to ask for an extension. But why would you wait to file, if you have a refund coming? State taxes may be a different story however.
What if I owe money?
If you don’t file, you’ll be charged a failure-to-file penalty of 5% and a failure-to-pay penalty of .5% of your taxes owed each month you don’t pay. The maximum penalty is 25% of the amount due. For example, if you owe $1,500 in taxes, that could mean paying an extra $375.
What if I owe the IRS but can’t pay?
You have a few options: credit card payments, payment plans, and “offers in compromise.”
OK, cool! Credit card it is.
With the credit option, you can make the payment directly on the IRS website and choose from three different third-party payment processors for a credit or debit payment.
Heads-up: These companies will charge you a convenience fee of around 2.5% of the amount being paid. However, this credit option comes with the potential perk of racking up bonus reward points or getting cash back.
I’m going with an installment agreement.
Even if you can’t pay the full amount, you should still file your taxes by the April tax deadline. This protects you from incurring failure-to-file and failure-to-pay penalties that add even more to your bill. When you file, include this Form 9465 Installment Agreement Request with your tax return. This will let the IRS know you want to set up a monthly payment plan. You can also apply online for the installment agreement.
Beware, though. The IRS charges a $52 fee to set up an installment plan for direct debit (and $105 for non-direct debit). If you don’t pay the full amount owed by the tax deadline — even if you file an extension — you’ll be charged a failure-to-pay penalty of 0.5% of your balance, due each month. This penalty, similar to the failure-to-file penalty, won’t be more than 25% of your unpaid taxes. If it’s a possibility, consider borrowing money to pay your bill instead of borrowing from the IRS and accruing these extra fees.
I’m curious about that “offer in compromise.”
The “offer in compromise” is a little-known way to settle your tax debt for less than what you owe. If a person owes the IRS money but can’t afford the full debt, they may be able to pay a smaller, more manageable amount. What separates this from a payment plan is that if the IRS accepts the “offer in compromise,” the IRS will forgive the rest of the taxpayer’s debt.
You have to fall into one of three categories to be considered for this option:
- The IRS might not have correctly determined the amount you owe.
- There is doubt you could ever pay the taxes owed in full.
- The amount is correct and you could pay it, but payment would result in economic hardship.
To see if you qualify for this option, submit Form 656: Offer in Compromise.
OK, I’ve chosen my option! But what if the IRS hates me?
It’s highly unlikely that the IRS hates you and TurboTax makes it easy to file your taxes before the tax deadline. Plus, over 75% of taxpayers received a tax refund last tax season so you shouldn’t worry about owing money. The key takeaway here is to file — ASAP. TurboTax is here to help, and one of their experts can walk you through filing your taxes.
The post is sponsored by TurboTax. This advertising content was produced in collaboration between BDG Studios and our sponsor, without involvement from Mic's editorial staff.
